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Updated about 3 years ago, 11/03/2021
Exiting The Military, VA Loan
Hello Everyone!
My name is Luke and I’m currently in the USMC. I am going to be departing from the military in approx. a year and moving to Phoenix, AZ. I am looking for advice/constructive criticism on my current plan upon entering the civilian world.
Within my last 6 months of service I am going to be working on getting my realtor license so I have potential for a job once I leave the Corps. During that time period I plan to use a VA loan to purchase a 3bd home within Phoenix. One of my current USMC team mates will be moving in with me upon purchase and splitting all expenses. Then within a year another one of my guys will occupy the last bedroom. So essentially "House Hacking" the property.
My main goal is to start my real estate journey on the right foot and set myself up for success.
Other questions:
Is the Phoenix market too saturated due to the huge influx of people moving there?
Am I going to be paying a premium because of it?
What would the benefit of putting any money down be if the VA loan allows me to put 0 down?
Thoughts on house hacking / living with friends?
Thank you for reading my post and helping me out.
V/R Luke Edwards
The interest rate doesn't really improve for a VA loan if you put more than 0 down. The only benefit in putting some down is a reduction in the funding fee. If you have any level of VA disability, the funding fee won't apply.
Luke,
It's early but welcome to AZ.
I think you have a great plan. As long as you don't mind roommates. In regards to becoming an agent, it's a job but it's mainly a commission-based gig. Just keep that in mind if you're looking for a steady check at first. However, house hacking while building your clientele will be beneficial allowing you to keep expenses low.
Is the Phoenix market too saturated due to the huge influx of people moving there? It is competitive and supply is low but you can still find a deal.
Am I going to be paying a premium because of it? The market is on the high however no one knows if and when things will turn. Home values are predicted to increase by 16% in 2022. We have jobs and population growth which creates a demand for housing.
What would the benefit of putting any money down be if the VA loan allows me to put 0 down? Not much benefit the money down would decrease the principal balance which would then lower your monthly payment. Don't quote me on this but I think for every 8k-10k down it lowers your payment by $100.
Thoughts on house hacking / living with friends? Why not you can buy the house with pretty $0 then rent out the rooms and have your mortgage paid for you. Sound like a win to me. Save your money and start looking for your second deal.
The last thing link up with the investors over at the Arizona Real Estate Investors Association (Azreia.org). It's a great place to get educated and meet other active investors.
@Luke Edwards Welcome to bigger pockets! I think your plan to house hack using your VA loan is fantastic. It's a great way to lower your effective monthly housing expense, while building equity and paying down the loan. Phoenix is a hot market for sure and prices have gone up a lot recently, but that doesn't mean you shouldn't buy there, especially if you plan to live there long-term. My wife and I are house hacking in San Diego using our VA loan.
Just curious: why do you want to become a realtor?
Good luck bro and keep us updated on your journey!
Hey Luke,
VA loan sounds great, but people don't usually talk about that 2.3% funding fee! 3.6% if its your second time using it. That's adding 8-10K in the Phoenix area. If your in a good shape financially and can apply a down payment to avoid PMI, I would. I regret adding 8K to my loan from buying into a VA Loan. GOOD LUCK!
Using a VA loan usually got me a half percent lower than on my loan that most people I know. Why not look for a duplex/triplex/fourplex to house hack with the VA Loan? If the VA loan has a funding fee if you don't have the full 20 percent it gets you out of PMI. My larger home has/had a lower monthly cost with the VA loan than friends who did the FHA loan every single time.
Hello Luke,
It's cool to hear that you're wanting to invest in Real Estate. I applaud you for taking that step!
House hacking is where it's at! I think you should totally do it. As an agent myself, I can assure you that making money in this field requires a lot of effort and delayed gratification. Regarding @Mike Delprete point, it is a commission based position and so the first year or so feels like you're pushing a boulder up a hill. So the house hacking strategy is almost a must in order to keep your expenses low.
Is the Phoenix market too saturated due to the huge influx of people moving there? I myself am not too familiar with the Phoenix market however I know it's extremely hot! I have many investor contacts there so I'd be happy to connect you with someone who better understands that market.
What would the benefit of putting any money down be if the VA loan allows me to put 0 down? I would recommend using the 0 down as that's the main benefit when utilizing a VA loan.
Thoughts on house hacking / living with friends? I myself rent to a couple of friends and some people frown upon it. However, I made it extremely clear to them on the front end of what I expect from them, and what they can expect from me as their landlord. Just be sure to set clear expectations so they know you have a business to run.
Feel free to reach out to me personally if you have any other questions or concerns! I wish you the best.
@Luke Edwards welcome to BP and thank you for your service to our country! As many here have said, you are best served to hit the ground running now with your VA loan and house hack a 2-4 unit to get the ball rolling. You are definitely on the right track and asking the right questions at this stage!
@Luke Edwards
Hi Luke! First off, welcome and good luck with the adventure! There are a couple of issues you might have with your plan:
1. I believe the VA requires you to have 1 year left in your commitment if you are purchasing while you're still in. Not 100% sure about that, but have heard of something happening to another marine recently.
2. As an agent, it will be harder for you to get a loan because you need to show you have two years of taxable income compared to a regular job.
I would max the VA loan out too because once you use it one time there is a cap on it if you try to use it again. Unless you refinance out to a conventional, but be careful with this because you are only allowed to do this once before the VA says no more.
Let me know if there is any way I can help and good luck!
For what it's worth, if I could go back in time to when I separated from the military (U.S. Army), I would tell myself to buy a multi-family unit and rent out the other units while I was going to school and/or working. If you have another year of service you should do your best to save as much a possible of your pay, to give yourself the best start possible.
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Where are you stationed now? Could you purchase a home right now and rent it out until you are ready to move in with your buddies? Although waiting might not be a bad idea as some think prices will drop a little in the near future.....
Originally posted by @Luke Edwards:
Hello Everyone!
My name is Luke and I’m currently in the USMC. I am going to be departing from the military in approx. a year and moving to Phoenix, AZ. I am looking for advice/constructive criticism on my current plan upon entering the civilian world.
Within my last 6 months of service I am going to be working on getting my realtor license so I have potential for a job once I leave the Corps. During that time period I plan to use a VA loan to purchase a 3bd home within Phoenix. One of my current USMC team mates will be moving in with me upon purchase and splitting all expenses. Then within a year another one of my guys will occupy the last bedroom. So essentially "House Hacking" the property.
My main goal is to start my real estate journey on the right foot and set myself up for success.
Other questions:
Is the Phoenix market too saturated due to the huge influx of people moving there?
Am I going to be paying a premium because of it?
What would the benefit of putting any money down be if the VA loan allows me to put 0 down?
Thoughts on house hacking / living with friends?
Thank you for reading my post and helping me out.
V/R Luke Edwards
Hi, Luke and welcome to BiggerPockets! I don't know anything about the Phoenix market, but I am an Air Force vet and have used my VA loan several times, so I know a few things about that. So a couple things to think about when using your VA loan. The VA loan is a great tool and used properly can help out tremendously. So, in one aspect, you could use your VA loan to purchase the home with 0% down, reducing your initial costs. House hacking will reduce (and possibly eliminate) your housing costs, which will be a significant help to you and give some stability when starting out as an agent, given the 'eat what you kill' nature of the commission-only pay. It was a little rough when I got out, as is sometimes the case with military/vets with not having that guaranteed check on the 1st and the 15th each month. Now, something to keep in mind, is you only have a certain amount of entitlement (what enables you to do 0% down on a VA) with which to use. So, on one hand, using your VA loan right off the bat can get you started and in the game. That is huge. However, depending on how much you pay and how much of your entitlement you use (I wrote a somewhat-lengthy post on a different thread explaining this), you may not be able to use it again on your next residence. You can get it fully restored to use again by refi'ing the first home out of a VA loan and then applying for a one-time reinstatement (I just did this, so yes, it is possible), but its just as the name implies-'one time'-so if you go this route and buy a second home after restoring your full entitlement you'll have to 'dispose' i.e. sell the home(s) to use it again for the third one. If you got any questions or I can be of help to you at all, just let me know. Good luck to you, brother!
@Luke Edwards
Luke,
I took a very similar approach after I got out of the ARMY and the only regret I have is I didn’t buy more Real Estate!
You’re plan is sold you definitely might pay a premium but AZ market is hot so getting in and getting a deal under your belt is the smartest thing you could do!
The Holidays is a bit of a down time so if you want to get in now is a good time! Good Luck! DM me if you got any questions.
